Reserve Bank official: Home loan deposits 'could be regulated'

Thursday 19 November 2009

Article by Mozo

Creating rules to limit deposits that home loans customers have to pay banks was suggested by a Reserve Bank official this week.

According to the Sydney Morning Herald, a senior official at the organisation developed the proposal as a way to prevent the formation of "credit-fuelled asset bubbles".

Despite acknowledging that a debate on the subject would require further exploration before a conclusion could be made, Reserve Bank assistant governor Guy Debelle highlighted situations in Asia where they have changed loan to valuation ratios (LVRs) to address bubbles.

"Singapore and Hong Kong are concerned about what’s going on in property prices," he was quoted by the newspaper as saying.

"They’re changing maximum LVRs."

The Reserve Bank was also in the news this week for telling the banks in Australia that they could top up their interest rates.

Reports in the Age said Dr Debelle addressed a banking conference in Sydney on the matter.

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